Neometals’ battery recycling joint venture has progressed talks with Mercedes-Benz to build a 2500 tonne a year lithium-ion battery recycling plant in Germany, as the world’s automotive giants step up the response to soaring demand for electric vehicles.
Amid sky-high lithium prices as demand for batteries outpaces supply, Perth-based Neometals will on Monday confirm Mercedes’ plans to partner with its 50-per cent owned business Primobius for the design and construction of the plant in Kuppenheim.
Mercedes-Benz is stepping up its strategy for recycling automotive battery systems.
Once the initial stage of the project for mechanical dismantling is constructed in 2023, it would mark Mercedes’ first move into battery recycling and comes as the carmaker looks to dump internal combustion engine vehicles and go all electric by 2030.
Mercedes said the recovered materials would be fed back into its “recycling loop” to produce more than 50,000 battery modules for new EQ models. The company also plans to “close the recyclable material loop with high-tech partners for battery recycling in China and the USA”.
“Lithium battery recycling supports conservation of resources, decarbonisation and supply chain resilience and we are excited to assist Mercedes in its goal to re-use recovered materials for the manufacture of new cells for Mercedes-EQ vehicle models,” Neometals chief Chris Reed said in a statement.
“We look forward to continuing our negotiations and entering into binding legal agreements in the near future.”
On Friday, Neometals shares rose 5.8 per cent to $1.47.
Mr Reed told The Australian Financial Review the plant could be the first of many the company would build for automotive makers as they go electric.
“It’s going to be a huge market. You only have to look at how many cars there are around the world [and this is] very much embracing the circular economy,” he said from London, where Neometals just secured a dual listing.
“If we look at Europe, in 2025 the total addressable market will be about 335,000 tonnes of batteries. As we stand in 2022, the total installed capacity is less than 70,000 tonnes. Say by 2027-28 you’re at 1 million tonnes total addressable in North America and Europe. We’re just at the infancy.”
Mercedes executive Michael Brecht said the new factory “will make the company more independent of raw material supplies in the future” and facilitate “important know-how on the subject of the circular economy and creating new, sustainable jobs that can be further expanded if operations are successful”.
It comes as lithium swaps hands at record prices amid strong demand and tight supply, with Macquarie analysts last week this month further upgrading their Chinese battery grade lithium carbonate price expectations by 105 per cent and 80 per cent for 2022 and 2023, respectively.
The broker expects global electric vehicle market penetration rates to rise to 22 per cent this year and 38 per cent by 2025, from 18 per cent today, led by the European and Chinese markets, the biggest adopters.
“Lithium production growth was outpaced by strong demand expansion over the last 12 months. Guidance from major incumbent producers has fallen short of our expectations and is expected to keep the lithium market tight in 2022,” the analysts said.
But as demand grows, “the sustainable recovery of recyclable materials is one of the very big issues of the future”, said Technical University of Clausthal Professor Daniel Goldmann.
Horst Krenn, managing director of Primobius, said intelligent recycling “significantly enhances the CO2 balance of lithium-ion batteries and shortens the time to reach the CO2 ‘break-even’ of electric cars in the future”.
